In Russian Arctic waters, a looming battle of giants

Rosneft accuses Gazprom of intervening in Arctic oil, while Gazprom is increasingly uncomfortable with Rosneft’s attempt to engage in production of Arctic LNG.

By

Atle Staalesen

There might not be any international scramble for Arctic resources, but the relationship between Russia’s two major energy companies are surely about to reach a level of Arctic heat.

According to Kommersant, Rosneft Deputy Board Chairman Nikolai Laverov President last week sent a letter to the federal Ministry of Natural Resources where he strongly critiziced Gazprom’s plans on the shelf.

The worsening relations come after the two companies’ successful joint action to prevent non-state companies from getting access to Arctic offshore hydrocarbons. As previously reported, after fierce lobbying, the two companies managed to preserve their shelf monopoly, much to the irritation and frustration of private companies as well as key government ministers.

With the monopoly situation intact, the two companies now increasonly look at eachother with distrust and as resource rivals.

While Gazprom fiercely opposes Rosneft’s attempt to break its gas export monopoly, Rosneft wants Gazprom to stay out of oil production. As previously reported, Rosneft has together with Novatek applied for permission to engage in production and export of LNG from Arctic fields. If permission is granted by government, it will mean an end to Gazprom’s luxurious gas export monopoly. Meanwhile, Rosneft is increasingly irritated by Gazprom’s engagement in Arctic oil developments. Subsidiary unit Gazprom Neft, Russia’s fourth biggest oil producer and a competor to Rosneft, has been granted several offshore licenses by its mother company, among them to the Dolginskoye and Prirazlomnoye fields.

Rosneft suspects that Gazprom intends to hand over a number of more licenses to its oil subsidiary. Meanwhile, Rosneft itself believes that it has natural gas reserves amounting to as much as 21 trillion cubic meters in its Arctic field portefolio, a volume by far exceeding the offshore reserves of Gazprom.

Rosneft, the state-controlled company headed by Igor Sechin, has over the last year rapidly enhanced its Arctic engagement and today holds a total of 43 licenses. And the company’s appetite has not yet been pleased. According to Kommersant, Rosneft has applied the federal mineral resource agency Rosnedra for another eight licenses. (Barents Observer, march 12,2013)